After years of Microsoft thriving in a controlled environment, the Darwinian message coming out of Redmond last week was that the software company must adapt to the brave new world of open computing or risk permanent residence as an also-ran to Google, Apple and others in technology’s emerging markets.

Most encouraging about the message was that CEO Steve Ballmer and other top executives delivered it, which analysts took as a sign that Microsoft may finally be breaking out of its software-only mindset.

With a huge part of its identity set to leave with founder Bill Gates in 2008, Microsoft will live or die based on how well it reconfigures its DNA in an environment where it is playing catch up to Google and Yahoo! in search advertising and Apple and Sony in portable devices.

“Microsoft is searching for a place in the new computing world,” said Credit Suisse analyst Jason Maynard. “Before they only saw a threat, but now they see an opportunity as well. But it doesn’t seem like they are sure how to execute the playbook.”

To be sure, from software and business services to gaming and portable devices, Microsoft has more business lines now than ever before – they just aren’t dominating any of them.

“They are trying to do everything when they should be focused on a few things that they do really well,” said W.R. Hambrecht analyst Robert Stimson.

While the company’s Internet-based software applications garnered much attention, sources zeroed in on its Zune project as a telling indication of where Microsoft might choose to marshal its creative energies. So, too, was the company’s realignment last year, which ceded a meatier role to entertainment and device development within the organizational structure.

Maynard said Microsoft could start coming to market with more specialized portable products of its own, such as a phone or reading device.

And don’t be surprised if Microsoft makes a big push into device development for video content. That’s because Craig Mundie, who developed Microsoft’s digital television efforts and ran the WebTV Networks unit, has assumed Gates’ role as the company’s strategic visionary.

“Here’s a guy whose spent an enormous amount of time thinking about the video space, and his strategic past will have a lot to do with Microsoft’s future direction,” said TiVo CEO Tom Rogers, who, during his time at NBC, helped create cable network MSNBC with Microsoft.

One of Mundie’s projects, an application that synchronizes digital photos to give the appearance of full-motion video, is already generating buzz.

“It smokes Google Video,” said Maynard of the product.

Such comments speak to Microsoft’s modus operandi – the company typically isn’t the first to market, but it has the patience and resources to steal significant market share once it gets there.

That’s reason enough for Google, Apple and the others to not get too comfortable with their market-leading positions.